Apple Prime? Goldman Sachs Says Apple Has A $19 Billion Bundle Package On Its Hands

Analysts at Goldman Sachs speculated that Apple Inc. AAPL needs to "go big in content" to find its next leg of growth.

Goldman Sachs' Simona Jankowski believes Apple should launch a subscription bundle that will "reinforce iPhone loyalty and leverage it into content." The analyst suggested that for $50 a month, Apple could offer a new service called "Apple Prime," which includes an iPhone, Apple Music, Apple TV, access to iTunes' content and movies. In addition, the package would include access to Apple's original content and even live sports.

"One of the key trends in content (video, music) consumption is the transition from purchases/rentals to subscriptions," the analyst argued. "It is difficult for a la carte businesses (e.g. iTunes downloads) to compete with the value proposition of a streaming subscription."

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Jankowski also conducted a survey with individuals who watch content online and concluded that consumers check for content on iTunes only after checking if the content is included in their streaming services first.

Jankowski suggested Apple could see nearly $19 billion in revenue by 2021 if it sells an Apple Prime offering.

Finally, the analyst argued that buying out an established video streaming provider like Netflix, Inc. NFLX or Hulu "does not make sense" since because: 1) content rights aren't necessarily transferable, 2) content acquisition could be "very dilutive," 3) Apple's early success with iTunes does not "translate well to the TV and movie industry."

Bottom line, a shift to a subscription based model would result in increased consumption of hardware (iPhone, Apple TV) and increase customer loyalty. From Apple's point of view, it will be in a better position to monetize its services and content and also give investors increased visibility on revenues.